A Dynamic Model for Location Choice with Environmental Quality

Abstract:     
This article is an attempt at setting up a general dynamic framework explicitly incorporating environmental concerns into a spatial economic model, and to do so in as general a framework as feasible. Migration is driven by utility gradients and population density increases have a beneficial effect on wages and adverse effects on environmental quality. The resulting partial differential equation, while more complicated than the standard diffusion model, is nonetheless solvable by the method of similarity transform ( Ames (1965), Debanath (2005)). Results in this case indicate that while there is diffusion of populations, it is likely to never extend an infinite distance. It is shown that further generalisations, in the same framework, lead to more complicated integrals while solving fundamentally the same equation.

Keywords: Spatial Dynamics,Population Dispersion,Location Choice, Environmental Quality

JEL Classifications: Q51, C61, R11, R23

Working Paper Series